Young adults owe more than $1 trillion in student loan debt, and all adults carry more than $700 billion in credit card debt, according to the Federal Reserve Bank of New York. Is there any question why financial education is imperative now more than ever?
Financial Education is more important than ever
You don’t have to be an economist or finance professional to be alarmed by these numbers. There is widespread concern that this debt will be carried by many well into their 40s and even beyond.
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Unfortunately, most states do not require any type of financial literacy class be taken for graduation. Only 17 states require a high school course in personal finance, according to the Council for Economic Education (CFEE).
To make matters worse, many parents do not talk about finances with their children at home. This leaves teenagers in the dark about making educated financial decisions.
When teens are given information about how credit cards work, they are much less likely to take on credit card debt. But many don’t even realize that there are late fees and how they can add up quickly, according to CFEE.
Of course, student loan debt is an even bigger issue for most millennials. Thirty percent of students with loans drop out of college before they earn their degree, and for the youngest millennials, 30 percent of their income goes toward debt repayment once they land a job, according to CFEE.
Imagine moving into the workforce with 30 percent of your income already gone, still leaving you to pay for rent, utilities, food, and gas to name a few.
The proposition of actually saving money for many of these young adults is simply not realistic. They are just trying to survive.
Teaching budgeting basics and simple concepts about how credit cards and student loans work is invaluable to young adults.
And the proof is there in the pudding! In the five states that require a finance education class, students were more likely to save money, pay off their credit cards in full every month, and less likely to be compulsive buyers, according to CFEE.
How can we expect young adults to be responsible for financial decisions that no one has ever bothered to educate them about? I think any parent or teacher would agree that knowing how to balance your checkbook is just as important as reading A Farewell to Arms.